Elad, controlled by Israeli businessman Yitzhak Tshuva, said it would receive 1.6 billion shekels ($US400 million) for its 60 per cent stake, while Kingdom will receive the rest. Kingdom, the investment vehicle of Saudi billionaire Prince Alwaleed bin Talal, will hold a 25 per cent stake once the deal is completed, Elad said in a statement.

Elad said Fairmont Hotels & Resorts, which has managed the hotel since 1999 and which is owned by the Saudi prince, will continue to operate the property.

Tshuva bought the hotel eight years ago for $US675 million. According to media reports, Elad had sold luxury apartments in the renovated hotel for $US1.5 billion.

The sale of the apartments alone netted Elad Group $US500 million in profit.